HEALTH ECONOMICS, VOL. 1:
61-70 (1992)
OPINION
SEVEN YEARS OF PROGRESS-GENERAL MANAGEMENT IN THE NHS SIR ROY GRIFFITHS
INTRODUCTION The following is the text of the Third Annual Audit Commission Lecture given by Sir Roy Griffiths in London on June 12th 1991. Sir Roy Griffiths is a graduate of Oxford and the Columbia Business School and initially worked in the private sector as a legal adviser. He joined J. Sainsbury plc, a retail supermarket chain, in 1968 and was their Director of Personnel from 1969 until 1979 when he became Managing Director. He was ‘translated’ from the private sector, in which he directed the rapid expansion of Sainsbury’s, to involvement in the public sector by Sir Norman Fowler, then Secretary of State for Health. Sir Roy was appointed Chairman of the NHS Management Enquiry in 1983 and the report from this enquiry resulted in the radical reform of management structures and practice in the NHS. Since then he has been closely involved in NHS policy making at the national level, serving as Deputy Chairman of the NHS Management Board from 1986-89 and authoring the innovative proposals for the reform of community care which wilI be introduced in 1993. Sir Roy’s impact on management processes and the translation of the reforming intentions of the Thatcher Government into humane and efficient proposals and practices have altered NHS performance profoundly and for the better. In this Audit Commission Lecture he reflects on the success of his management reforms. The Editors are grateful to the Audit Commission for permission to publish this lecture.
Chairman, Ladies and Gentlemen, May I thank the Audit Commission, for whose work and leadership I have the greatest admiration, for according me the great honour of inviting me to give this the Third Audit Commission Lecture, particularly as I am following in the distinguished footsteps of the previous speakers John Major and Jack Cunningham. The Audit Commission emphasised that it was always their intention to include both politicians and practitioners, and I am the first practitioner. I am particularly grateful to the Audit Commission for their confidence in me, someone whose major occupation for many years has been as Deputy Chairman and formerly Managing Director of the country’s most successful supermarket chain. I say that because we all know that the term supermarket in relation to the NHS is a term of abuse which ranks alongside the term accountants or even the 1057-9230/92/010061- 10$05.00 0 1992 by John Wiley & Sons, Ltd.
term politicians. The Audit Commission has given me the brief that I should be prepared to talk about the changes in the NHS and in particular the evolution of general management in the National Health Service since my first report and possibly look forward and speculate on the kinds of management skills which will be needed in the new environment. I reflect with considerable fortitude that it is my lot to be giving a major speech on the NHS at a time when even fools should hesitate to rush in, let alone angels fear to tread. It is seven years since the government decided after appropriate consultation to implement the Management Inquiry Report. I thought I really ought to re-read the Report and any of you who genuinely wish to understand the background to recent government legislation should do the same. The report is remarkable for what was set in train and equally remarkable for what was in the course
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of implementation overlooked or side-tracked, but which was later picked up. I propose, first, to give you some background and then to read some extracts. It was Norman Fowler who in January 1983 asked me to head a team of four business men to give advice on the effective use and management of manpower and related resources in the National Health Service. We were asked not to make any recommendations which would require legislation. The background to the setting up of the Inquiry was the tremendous parliamentary questioning on the waste and inefficiency in the Service. We were not at the outset asked to write a report, and the impression given was that we should simply advise at appropriate meetings, the whole exercise taking say a day a month for about eight months. Eight-and-a-half years and two days a week later I smile ruefully. Once we became involved, however, the noise level in the NHS reached almost unprecedented heights and Margaret Thatcher after three months requested that we should write something, however briefly, to encapsulate our observations and main recommendations. Since I and the other members were all working full-time for our respective companies we compromised by writing a 23 page letter to the Secretary of State simply saying without an exhaustive sweep of the options what we would do in his place. Bear with me if I read you some extracts. I quote: ‘One important prelude to the recommendations: we believe that a small, strong general management body is necessary at the centre (and that is almost all that is necessary at the centre for the management of the NHS) to ensure that responsibility is pushed as far down the line as possible, i.e. to the point where action can be taken effectively. At present devolution of responsibility is far too slow because the necessary direction and dynamic to achieve this is currently lacking. Recommendations for action:
The Secretary of State should set up within DHSS and the existing statutory framework, a Health Services Supervisory Board and a full-time NHS Management Board. Units of management. District Chairmen should: 1. plan for all day-to-day decisions to be taken in
the main hospitals and other Units of Management. If decisions are to be taken elsewhere
than in the Unit, Chairmen should require justification. 2. Involve the clinicians more closely in the management process, consistent with clinical freedom for clinical practice. Clinicians must participate fulIy in decisions about priorities in the use of resources. Property. The Chairman of the NHS Management Board should ensure that a property function is developed so as to give a major commercial reorientation to the handling of the NHS estate. Patients and the community. The Management Board and Chairmen should ensure that it is central to the approach of management in planning and delivering services for the population as a whoIe, to: 1. ascertain how well the service is being delivered
at local level by obtaining the experience and perceptions of patients and the community: these can be derived from CHCs and by other methods, including market research and from the experience of general practice and the community health services. 2. Promote realistic public and professional perceptions of what the NHS can and should provide as the best possible service within the resources available. General observations. The clear similarities between NHS management and business management are much more important. In many organisations in the private sector, profit does not immediately impinge on large numbers of managers below Board level. They are concerned with levels of service, quality of product, meeting budgets, cost improvement, productivity, motivating and rewarding staff, research and development, and the long term viability of the undertaking. All things that Parliament is urging on the NHS. The NHS does not have the profit motive, but it is, of course, enormously concerned with control of expenditure. Surprisingly, however, it still lacks any real continuous evaluation of its performance against criteria such as those set out above. Rarely are precise management obectives set; there is little measurement of health output; clinical evaluation of particular practices is by no means common and economic evaluation of those practices extremely rare. Nor can the NHS display a ready assessment of the
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effectiveness with which it is meeting the needs and expectations of the people it serves. A general management process would be enormously important in: 1. providing the necessary leadership to capitalise on the existing high levels of dedication and expertise among NHS staff of all disciplines, and to stimulate initiative, urgency and vitality. 2. Securing proper motivation of staff. Those charged with the general management responsibility would regard it as vital to review incentives, rewards and sanctions.
Background to recommendations. It is not for the centre to engage in the day-to-day management of the NHS. It must make sure that the statutorily appointed Authorities do so effectively in accordance with the requirements of Government and Parliament. Sufficient management impression must be created at all levels that the centre is passionately concerned with the quality of care and delivery of services at local level. As a coherent management process is developed, of planning, implementation and control, the DHSS should rigorously prune many of its existing activities.
7 . On a general management role the essence of which is to improve accountability to seek major change and to secure motivation of staff. 8. Need for the estate function to act in a more businesslike fashion. 9. Need for a strong personnel function.
The report has to be set against some personal beliefs about running large organisations. 1. I believe in personal accountability for perfor-
2.
3.
4.
Other aspects of management. To effect change some outside catalysts will be required; but there are enough people at all levels within the NHS enthusiastically committed to wanting change and capable of making a contribution to ensure that it can largely be effected from within.’
May I just briefly emphasise some of those recommendations. Note the emphasis is on: 1. a satisfactory role at the centre with a split
2. 3.
4. 5.
6.
between policy making and implementation and the DHSS being reoriented to include in its broader activities support for the Supervisory Board and the Management Board. Delegation with hospitals free to take as many decisions as possible. Involvement of professionals in the management process. On a consideration as to what service the NHS should provide. Determination of objectives; measurement of output; clinical and economic evaluation of work. Concern for the best deal for patients, staff and the taxpayer.
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mance against clear objectives, reasonably precise resources and clear time scales for performance. All three have to be present for an effective management process. Every organisation is unique and any recommendations have to be considered sensitively in the light of its history, values and strengths. There is no point in denigrating what has gone before in order to force a comparison with the advantages of new proposals. All top-class organisations are marked by good strategic thinking at one extreme and powerful implementation at the other. Too many organisations wander the middle ground. One can put across an organisation whether in the public or private sector a series of templates to assess the effectiveness of the organisation. First all organisations should be involved with three things, quality of service, productive use of resources and motivation of staff to achieve both quality and productivity. Another template is how well does the organisation look after its patients (or customers in the private sector), how well does it look after staff, how well does it serve the community and how well does it serve the taxpayer or shareholder. Does all this seem hopeless generalisation-a detailed analysis could be the subject of another lecture, but certainly in 1983 quality, productivity, motivation and how well in detail do we look after and respond to the various audiences, rarely appeared in specific analysis on central or health authority agendas. I believe in delegation. My management philosophy tells me that delegation is good for two reasons. It is very liberating for people at local level running a hospital to feel that they have most of the powers necessary to give an effective performance. Secondly, from a top management point of view it enables you to stop up the excuses i.e. it stops managers at
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lower levels from saying that if only they had been allowed to take a particular course of action then everything would have been fine. Delegation is not a generalised term-it means that every major decision area has to be analysed carefully and clear authority given at every level of the organisation. There is no greater frustration for a manager than to be given new responsibilities without those responsibilities being very clearly specified. 6. Leadership is vital. It needs vision to show the path ahead, it needs the ability to motivate people. In an organisation consisting of enormously able professionals autocratic management is clearly impossible. Rather the view of a Chinese Philosopher, ‘To lead the people you must walk behind them’ i.e. by cajoling them, by persuading them, by gently motivating them in the right direction. It is not characterised by the management school of Abraham in the Bible who packed up his tents knowing not whither he went. It is more of the School of Columbus, who must incidentally, have been the patron saint of general management. Remember it was Columbus who as an act of faith and under instruction from the government of the day, set out believing that a new world was there to be discovered. His journey was characterised by great hardships and from the outset there was a severe shortage of funds. Ladies and gentlemen, I will not press the analogy too closely, other than to note he was successful. 7. I believe in competition. Competition is a great spur, but it needs good management to handle it. 8. Finally, I believe that change has to be handled well-top-class communication, persuasion that the vision carries credibility and that the planning is likely to be effective, all the time looking after the interests of staff and ensuring that they are trained to do the new work. And most importantly, listening to staff to ensure that their contributions are taken into account and their concerns noted.
which could encourage the staff to deliver. Observing the then Secretary of State I was reminded of what President Truman said when Eisenhower was elected President. ‘Poor, old Ike he has just come from the military and he will sit at this large desk pressing buttons, sending out instructions and making demands of everyone in the country, and not a damn thing will happen’. This is why I concentrated in the Management Inquiry Report in providing the necessary machinery to translate policy into effective action. That is why I made the recommendations for a top Supervisory or Policy Board involving outside directors in helping to bring realism and priority into policy formulation and a Management Board to introduce its own time scales and dynamic into implementation. This was to be replicated down the line by the general management process at regional district and unit level with responsibilities and accountabilities being spelled out as clearly as possible. The overall background to the report which I was seeking to reflect, was characterised by three major trends coming together. First that the NHS, born in the post war years of queuing and shortage, had to be updated to reflect the aspirations of people today. They don’t want a Health Service carrying the utility labels of the Forties and heavily rationed. They are looking for a Health Service with a good high quality label not only free at the point of delivery, but the point of delivery itself has to be more immediate and more sensitive to a patient’s needs. The second trend was that the public sector had been feeling its way from administration to management. The essential difference is that administration is essentially interested in the implementation of central and local policies to see that rules are enforced in as evenhanded a way as possible; management is a constant search for improvement, sensitive to all the audiences it serves, particularly to the users and to that end seeking to involve them and to respond flexibly to them. The third major trend was that in the development of large organisations there had been a definite move from a highly functional form of organisation, where work is How did all this work out? I was struck during my precisely organised according to skills or profeswork in 1983 on the division between policy sions, to a form of organisation structure where making on the one hand, and reality on the the work to be done is grouped not according ground in the hospitals in two respects. First, that wholly to the skills, but in terms of the end results the policy making seemed to take no account of to be achieved. Different kinds of work are the ability of the service to deliver, and secondly obviously done by different people at different that there was in fact no management process times, but the accountability is for the completed
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end product. So, the idea of general management was to reflect this. I realised that at local level this might involve impact on the traditional forms of organisation and would alter in many cases the reporting relationships. I also believed very strongly that knocking down the walls with which a profession surrounds itself can be a liberating or threatening experience, according to how you view it. I personally believed and intended it to be liberating in the sense that the doctors and nurses would have the opportunity of having a much greater say in the running of the Health Service and not be concerned solely with their professional work and responsibilities. It would also give them greater opportunities on a personal basis to take the top management positions at all levels within the Health Service-on that basis they could become the best of all managers, T shaped managers with an indepth professionalism accompanied by the broadening of management experience. The Management Inquiry Report was well received by government, but less well received by the professions. I am given to understatement. The nurses saw it as a challenge to a carefully established professional career structure. The medical profession saw the report correctly as questioning whether their clinical autonomy extended to immunity from being questioned as to how resources were being used. All the professions saw the report as the introduction of economics into the care of patients, believing that this was inimical to good care. There was a deepseated feeling that what distinguished the Health Service from the private sector or business or commerce was the very immunity of the Health Service from the supposedly corrupting influence of profit making and that this very immunity itself guaranteed high quality. This denies the fact that the hallmark of the truly great organisations in the private sector is that they have placed quality and customer satisfaction first and profit for a long time simply emerged as a by-product of effective service. The truth is that it is the same attitude which gives top class quality and top class value-an obsessive wish to do things better. The report was never intended to be confrontational with the professions. With two children as doctors I could very easily achieve confrontation with the professions domestically without having to take on the professions at large. What the report did achieve was something more subtle. It forced the professions themselves to rethink their
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position. I pay tribute to them to the extent that they have done this and certainly the response two years ago of the Royal Colleges to the latest government legislation was, even though in disagreement, considered and managerial to an extent which many would not have believed a few years before. One or two things I did not intend. Whilst my name at the time was primarily connected with general management I personally took this as shorthand for the introduction of an effective management process. I did not intend that the result should be yet another profession in the National Health Service to work in parallel with other professions. I know that parallel lines meet in infinity, but I was looking for something more immediate and temporal. I was, in short, seeking to establish a management process which would suffuse the whole activity and involve all in the Health Service in its effective implementation. Secondly, it is clear from the report that I did not believe in bringing large numbers of people in from outside. I simply did not wish it to be taken for granted that one could effect the change without some catalysts from outside with a different background and experience, but certainly not in numbers which the Health Service would be unable to absorb. The Report was implemented. Many felt that the implementation left much to be desired, particularly the nurses who felt that implementation at local level was particularly insensitive to their professionalism with nursing positions in many cases being absorbed or collated with other responsibilities. I personally would have liked different priorities of implementation. In any organisation one has to be sure that at the centre the organisation and responsibilities are clear and effective and similarly at the other extreme where service is to be delivered. The Supervisory Board and the Management Board were absolutely correct in concept but half-hearted in their implementation. Major policy issues were left uncovered. There was no attempt to establish objectives at the centre and no concentration on outcomes. In the hospitals there were experiments with budgeting and resource management. The first priority I always saw, however, was to establish responsibility clearly at local level with a management structure capable of delivering the tasks of the hospital e.g. through clinical directorates and an effective Management Board at local level. Systems information and financial management would follow and support the responsibilities but would be
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clearly secondary to that process. To seek to establish such information systems without clarity of the organisational structure is a bad case of putting the cart before the horse. A preliminary to all the above I saw as the need to motivate staff-by emphasis on quality, by reassurances as to their personal position and opportunities under the new system and above all, by explaining very fully what was being proposed-all this would ensure a joint effort towards a quality service. There is no doubt that the new management processes caused staff within the Service to think differently and to look at problems and opportunities in a new way. Certainly to introduce the type of management change that had been put forward was and is a long process. This leads to difficulty in that managerial time-scales and emphases are often different than political time scales and emphases, which tended to be governed by the next election. Add to this that politicians are not very excited by the management process.As with top civil servants the adrenalin flows in bringing out new policy documents, getting them through No. 10 and through the Houses of Parliament, whereas the process of implementation is very long and laborious. I remember one Minister in the mid-Eighties saying rather wistfully that getting the NHS to change direction was rather like turning an aircraft carrier, a long and slow process and even then what he overlooked was that an aircraft carrier, unlike the NHS at the time, had the advantage of a fairly sophisticated set of controls. I will qualify this comment on timescales later. So by the end of 1987, three years after implementation of the report, we saw General Managers in position accountable for the performance of their organisation; management systems were introduced with performance standards and performance reviews. There was a high emphasis on improvement in service. Authorities had in many cases reorganised to make their services more responsive and to take responsibility for quality assurance. There were significant trials of management budgeting or resource management giving doctors and nurses a bigger role in the management of resources through budgeting responsibility against agreed workloads, and some improvement in information systems. Just as general management was finding its effective feet the level of decibels both in the Health Service and on the political front, scaled new heights and Margaret Thatcher in early 1988 decided to estab-
lish her own Review and in the result to present new challenges for the recently established general management. It was an astonishing episode in many ways. It derived, as is well known, from the arguments as to levels of funding, with one or two high profile incidents in hospitals where patients were allegedly denied care because of lack of funds. It started out by seeking to examine new methods of funding the NHS and after careful consideration moved abruptly from this theme. It then switched to building on the existing management reforms and seeking to inject more competition and choice into the service. It chose to do this by means which would have made strenuous demands on a well established management, let alone the still fledgling management process. They were heady days. I remember Civil Servants talking about Perestroika for the Health Service and I remember commenting that in talking of Perestroika the analogy might be worse than the problem. Two years later, seeing what is happening to Perestroika, I think that was appropriate. The fundamental changes of the reforms were first to emphasise the different role for District Health Authorities, that they should be primarily concerned with establishing what health care provision was needed in their yarticular district and that they should purchase this from a variety of providers, either the new NHS Trust Hospitals, their own directly managed hospitals, or indeed from hospitals within the Health Service or in the private sector. This was abbreviated to the purchaser/provider relationship. Now for anyone in the private sector such a role for top management is a statement of the obvious. A director of distribution, for example, in a big retail company is not simply concerned with running the companies .warehouses and its transport fleets. He is concerned with ensuring that goods arrive at a store as ordered at the right time and in good condition. How he does that, whether through his own warehouses and transport, or direct from the supplier, or through using outside contractors is for him to decide, according to the quality and effectiveness of the service which is being offered. Nor of course was it new in the public sector. In my report on Community Care published more than a year before the Health Service Review, I said that the role of the local authority was not primarily to provide care directly, but to ensure that care was provided and to choose whichever means in the public, private or voluntary sector
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could best supply such care. Similarly, any top management in the private sector would understand the establishment of NHS Trusts-separate entities all within the umbrella of the parent company-as an alternative to but with similar aims to straightforward delegation of responsibility in as broad terms as possible. So the Trusts are all within the umbrella of the NHS and are tied into the delivery of the major objectives of the Service, not through a management line but by contract. The third change was to firm up the role of the management executive and the policy board very much on the lines of the previous management board and the supervisory board, but with in this case a firm instruction to the Ministers at the centre to make it work. Fourthly, the health authorities were reformed on more businesslike lines with people appointed who could best run the hospitals as distinct from being representative of particular groupings including local authorities. Fifthly, GP budgets were introduced and owing much, as did the concept of the internal market, to American influence or at least to the views as distinct from the recommendations of Professor Enthoven. The advantages of the review were, first, that it illustrated that the increasingly strident articles by commentators looking for some fundamental move away from the basics of the National Health Service-care, free at the point of delivery and financed out of general taxation-had been considered and rejected. Secondly, the fact that it was Mrs. Thatcher’s review added determination to ensure that its recommendations were pushed through giving new impetus to the managerial changes of recent years, and in particular that the position at the centre was clarified and made workable. This has been achieved and I am now confident that the Policy Board and the Management Executive are very capable of running the Health Service effectively. On the other hand, because it was Mrs. Thatcher’s review even the simplest management concepts were imbued, indeed saturated, with political overtones. The truth is that it is not a particularly political document. Any speculation that it was a prelude to privatisation of the NHS in whole or part or that the Trust hospitals were outside the NHS is pure fiction and could more realistically have been entered for the Booker Prize, except that the exchanges on the subject have lacked the necessary literary merit. The substantive aspects of the NHS remain undisturbed. The internal
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market is not competition red in tooth and claw. The possibility of real competition between purchasers or providers will in many cases not be practical, particularly in areas outside the major cities. It hopefully will not even be a managed market to the extent that this might imply excessive intervention from the centre. The reality is that it is a managerial market as distinct from a managed market with managers free to place funds where service can be most effectively and economically supplied. Thirdly the review has, in its emphasis on hospitals being given much more freedom and on GPs being given their own budgets, already caused a surge of new thinking and experiment, and very considerable enthusiasm to looking for new ways in which a quality service can be provided. What are the problems for the new management of the whole approach? 1. In a true market where there is real competition between the providers, the price would be determined by the competitive process. In fact in the NHS it will not be possible to rely in most cases on actual competition or on an evenly matched purchaser and provider to determine a price. This means that other purchasers and providers will have to rely on prices derived from a study or analysis at the centre of a broad range of contracts and costings. The problem is that the costings system to support this approach are as yet rudimentary and even then very much within the control of the providers. In many cases the apportionment of costs will be crude and can in certain cases be very crude. There is a lot of work to be done. I have illustrated that in the case of costs. It equally applies in the whole of the information systems necessary to support the new activities. 2. Problems which have arisen in communication as to the government’s intentions. The government had turned its back on the fundamental change to the methods of funding and at the same time emphasised that the NHS was not a commercial organisation (a fact I had recognised since 1948), but then paradoxically plunged into an emphasis on concepts of the internal market and the purchaserlprovider relationship which have a strong commercial ring. They were intended to shake up the NHS to new ideas of competition and choice and to make it clear to hospitals that they had to
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compete and be efficient in order to survive. To that extent such words are justifiable but buzz words for one audience can be gobbledygook for another audience. We have to explain in different simpler terms the intent of the reforms for the man in the street and for the general body of staff. Such words as the internal market and the purchaserlprovider relationship are difficult concepts in the Health Service itself, let alone to the public outside. Emphasis on these buzz words always reminded me of the story of Sergeant Sullivan, who was a King’s Counsel. He was defending some Irish tenants against eviction by the landlords. When the judge leaned over and said, ‘Surely your clients understand the maxim “volenti non fit injuria?” ’ Sergeant Sullivan replied, ‘My Lord in the taverns of Tipperary they talk of little else.’ So in Coronation Street and Albert Square one can imagine that they talk of little else except the internal market or the purchaserlprovider relationship. What they are actually interested in is how all the reforms will contribute to a better Health Service.
comes as distinct from simply talking about the input of resources. Depending on the type of contract which is agreed, whether it is a block contract, a contract for price and volume, or a contract for payment for units of treatment, there will be an increasing need for accurate information not only on costs, but more immediately on the quality of service being provided in all its aspects. Measurement of quality is an extremely difficult task, but it has to be attempted and built very specifically into the contracts. This is a major change in itself, but is, as I mentioned earlier, what the service is about-the delivery of a quality service at a reasonable cost-the two go together in the concept of good value. The Service has to get accustomed to receiving and using regular information on performance. The hospital and District Health Authority can build up their own information requirements and decide the frequency, daily, weekly, monthly, etc. It has to be good, timely and the minimum necessary for monitoring performance. General Managers will also need to enhance their communications skills in informing and consulting staff on major proposals affecting the hospital. They badly need to understand the importance of welding the hospital I now turn to the second part of the remit which teams together and this needs very great concern The Audit Commission gave me, ‘What kind of for the worries of staff in the period of major management skills will be needed in the new change and reassurance as to security and career environment?’ The first observation is that there prospects. In the hospitals themselves manageis no point in talking about skills unless respon- ment has to understand that they too have a sibilities are clearly understood. Whilst the new major, albeit different, healing responsibility. Trusts and GP budget holders may have been There is no point in confrontation with the very centre stage, it is the District Health Authorities professions through whom the changes have to be to whom we should look to ensure that the real achieved. A lot of this is good personnel work. In progress arising from the reforms is achieved on the Service generally, but in the major Trust behalf of the people within their district. General hospitals in particular, management will have to Managers of the districts have to include in con- learn new personnel skills. With the extensive tracts quite specific agreements on quality, waiting delegation of responsibility for pay and terms and times, appointments, speed of response, provision conditions then the ability to understand pay of information, as well as price. In the transi- systems and industrial and staff relations takes on tional phase GP budget holders may be quicker a new significance. Nothing will be more costly or off the mark in negotiating favourable terms for give rise to greater feelings of injustice if these their patients, but it is ridiculous that the DHAs questions are handled badly. The skills necessary should not soon be ensuring that the patients for are not to be under-estimated. The implicit whom they contract should be getting service at assumption has already been made that the advanleast as good as the GP budget holders. So the tages of handling pay hospital by hospital District General Managers have to be aggressive outweigh the disadvantages of the feelings of ineand vigilant to ensure that their patients are quity which may arise from pay being different in getting a quality service. different hospitals in close proximity to each The next observation is that the essence of the other. Considerable skill will be needed to handle new District Health Authority role and of the change in relative pay between individuals or hospitals is to concentrate much more on out- groups within the Trust hospitals themselves
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arising from management’s greater freedom to handle pay. Equal skill will be required to handle pay differentials between management in the Trust hospitals on the one hand and management in Districts and other authorities on the other hand, with the latter less free to pay the higher salaries. The third observation is to broaden the question. Management is not simply a bundle of skills, it is above all an emphasis on values, attitudes and beliefs, evidencing not only in communication, but in all aspects of behaviour that these are important. The manager or the chairman can talk until he is blue in the face about service to the patient, about quality etc. but if he once passes a hospital outpatient department which has long queues and an air of neglect; if he passes this without questioning as to why it is happening and seeking an understanding of what is being done to correct it, then he will show that he is not really interested in a quality service. Equally staff have to understand that an emphasis on quality is completely consistent with being cost effective. It has been a characteristic of the service that when you mention efficiency or costs there is the immediate reaction that they are inimical to a concept of quality. But I re-emphasise it should be the same attitude of seeking improvement which pervades both. We also need to get across to staff that at the same time we understand their concerns and are tackling the problems-genuinely tackling the problems. The reforms are important but not obsessively so. A major part of the motivation of staff within the hospitals and indeed of satisfying the public is a perception that the hospitals are being run well at local level and that the simple and obvious problems are being tackled. Where local management can evidence that it is running a quality operation and doing simple things well then staff morale is much higher. This has to be the case right through the service-at top level there are still too many reports on the public sector from the National Audit Office and from the Audit Commission which are highlighting glaringly obvious needs for management actionpurchasing, manpower control, estate management etc. (all mentioned as requiring action in my 1983 report and only recently receiving the appropriate attention). I mention manpower controls; in seeking to motivate professionals to face up to the many challenges, it is difficult to do this if at the same time they feel that a whole new bureaucracy of staff is being built up, whether in finance,
systems or whatever. I am the first to say that to carry out the reforms such staff are necessary. But it is unforgiveable to build up such staff without evincing at the same time that there is a proper system of manpower control in all areas, and that every job is scrutinised for its contribution to the overall aims. Let me address one more subject. We are now in the process of setting clear priorities, targets and goals for the NHS in the Green Paper ‘The Health of the Nation’. I am delighted we have come to this. I have always argued that it was completely inappropriate that we should from the centre be talking the language of priorities to the managers in the Health Service, asking regions and districts to come up with their priorities for approval, unless we were prepared to establish targets and priorities for the total Health Service. I raised this fairly regularly some years ago, but there was always a worry politically, in that to set targets which could be monitored might be giving hostages to fortune, a feeling, as someone once said, that the air might eventually become dark with chickens coming home to roost; a background feeling that Ministers did not like priorities because everything which is not a priority has six questioning back benchers attached to it. Also a doubt lingering from long government experience as to whether there was in fact the machinery to attain such targets. One of the great achievements of general management in the health service is that sensible and realistic policy stands a good chance of being implemented. The management process has taken root, none of the subsequent reforms would have been possible without it and life will never be the same again. So it is a brave but correct step which William Waldegrave has taken in submitting the whole of the NHS to the simple question as to what are our priorities for health over the next ten years. The ability to achieve this measured against targets at appropriate intermediate points, together with increased activity and greatly reduced waiting lists will be the sign that we are really going places as distinct from continually redesigning the sails or reinventing the compass. This latter step together with the reforms themselves, show that this government has been brave enough to have a timescale for the NHS much beyond the next election. The reality is that the reforms are unlikely to bring significant advantage before then. The government has realised that bringing about major change is not ,
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the 60 metres dash but a major steeple chase with all kinds of barriers before reasonable success. Management in the Health Service is enormously difficult and no business in the private sector would relish seeking major change if every incident was the stuff of headlines. The attempt in recent years to introduce and develop the management process in the Health Service was bound to be a rough ride and particularly to implement the latest reforms. The status quo has been challenged and once you change relationships between groups of staff, between different authorities and between various activities, you are almost bound to cause turbulence. Secondly, if you delegate and free people to take their own decisions, they will in three cases out of five not do things exactly as you would have wished. The consequent uproar is part of the price you pay for reaping the advantage of liberating management to take decisions and to do their own thing. The book ‘In Search of Excellence’, which is much quoted, did a signal disservice in this respect. It allowed any Chairman in the private sector to suggest that his successes were achieved in a quite orderly fashion by superb strategy, excellent planning, dynamic implementation and careful monitoring. My experience is that even in the best managed companies major change is a lengthy and not too orderly process-did someone say ‘steady state’ and ‘no surprises’? Hopelessly wishful thinking. I reiterate that this type of change is a lengthy process. You can get staff to understand the problems intellectually comparatively quickly, or at least one ought to be able to do so. To get people to identify with the reforms and to alter their behaviour accordingly is a much lengthier process and requires enormous effort, not least of training. Whilst I emphasise the length of the process, I am not subscribing to the Chairman Mao reaction when asked what he thought the impact of the French Revolution had
been-he said, ‘Give it time.’ At the other extreme, I do not expect miracles within six days. I can appreciate that the first example of major change was when the Almighty brought order from chaos within that period. He certainly would not have achieved it in even six years, let alone six days, had the House of Commons been sitting at the time contesting every painful inch. Am I confident? Am I optimistic? Of course. It has been an enormous privilege for me to have written two major reports, the Management Inquiry Report on the NHS and the Community Care Report. Both have the same thrust to ensure that we have the necessary machinery to translate policy into action. Both the Health Service and Community Care are major causes with which to identify-nothing can be more worthwhile. I have spent my life in the private sector seeking to give value and to create wealth. The mark of a civilised society is how well we use the wealth so created-to support the weak and comfort the afflicted. I travel fairly extensively, not least in recent years at the invitation of other governments to discuss Health matters. They have the same problems and in many cases are looking to the same answers as my report and the government reforms. The discussions have confirmed for me a view I have held for the last 43 years, that the NHS is the greatest piece of social legislation this century in this or any other country, translating into practical reality for me and for my generation the concept of care for one’s neighbour. All we have been seeking over recent years is, true to those basic ideals of the NHS, to manage the Service so that it meets the advances in medicine and the changing expectations of the people it serves. I believe that in any history of the Health Service the 1983 report and the process of general management will be seen to have been a major contributor.
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OPINION
SEVEN YEARS OF PROGRESS-GENERAL MANAGEMENT IN THE NHS SIR ROY GRIFFITHS
INTRODUCTION The following is the text of the Third Annual Audit Commission Lecture given by Sir Roy Griffiths in London on June 12th 1991. Sir Roy Griffiths is a graduate of Oxford and the Columbia Business School and initially worked in the private sector as a legal adviser. He joined J. Sainsbury plc, a retail supermarket chain, in 1968 and was their Director of Personnel from 1969 until 1979 when he became Managing Director. He was ‘translated’ from the private sector, in which he directed the rapid expansion of Sainsbury’s, to involvement in the public sector by Sir Norman Fowler, then Secretary of State for Health. Sir Roy was appointed Chairman of the NHS Management Enquiry in 1983 and the report from this enquiry resulted in the radical reform of management structures and practice in the NHS. Since then he has been closely involved in NHS policy making at the national level, serving as Deputy Chairman of the NHS Management Board from 1986-89 and authoring the innovative proposals for the reform of community care which wilI be introduced in 1993. Sir Roy’s impact on management processes and the translation of the reforming intentions of the Thatcher Government into humane and efficient proposals and practices have altered NHS performance profoundly and for the better. In this Audit Commission Lecture he reflects on the success of his management reforms. The Editors are grateful to the Audit Commission for permission to publish this lecture.
Chairman, Ladies and Gentlemen, May I thank the Audit Commission, for whose work and leadership I have the greatest admiration, for according me the great honour of inviting me to give this the Third Audit Commission Lecture, particularly as I am following in the distinguished footsteps of the previous speakers John Major and Jack Cunningham. The Audit Commission emphasised that it was always their intention to include both politicians and practitioners, and I am the first practitioner. I am particularly grateful to the Audit Commission for their confidence in me, someone whose major occupation for many years has been as Deputy Chairman and formerly Managing Director of the country’s most successful supermarket chain. I say that because we all know that the term supermarket in relation to the NHS is a term of abuse which ranks alongside the term accountants or even the 1057-9230/92/010061- 10$05.00 0 1992 by John Wiley & Sons, Ltd.
term politicians. The Audit Commission has given me the brief that I should be prepared to talk about the changes in the NHS and in particular the evolution of general management in the National Health Service since my first report and possibly look forward and speculate on the kinds of management skills which will be needed in the new environment. I reflect with considerable fortitude that it is my lot to be giving a major speech on the NHS at a time when even fools should hesitate to rush in, let alone angels fear to tread. It is seven years since the government decided after appropriate consultation to implement the Management Inquiry Report. I thought I really ought to re-read the Report and any of you who genuinely wish to understand the background to recent government legislation should do the same. The report is remarkable for what was set in train and equally remarkable for what was in the course
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of implementation overlooked or side-tracked, but which was later picked up. I propose, first, to give you some background and then to read some extracts. It was Norman Fowler who in January 1983 asked me to head a team of four business men to give advice on the effective use and management of manpower and related resources in the National Health Service. We were asked not to make any recommendations which would require legislation. The background to the setting up of the Inquiry was the tremendous parliamentary questioning on the waste and inefficiency in the Service. We were not at the outset asked to write a report, and the impression given was that we should simply advise at appropriate meetings, the whole exercise taking say a day a month for about eight months. Eight-and-a-half years and two days a week later I smile ruefully. Once we became involved, however, the noise level in the NHS reached almost unprecedented heights and Margaret Thatcher after three months requested that we should write something, however briefly, to encapsulate our observations and main recommendations. Since I and the other members were all working full-time for our respective companies we compromised by writing a 23 page letter to the Secretary of State simply saying without an exhaustive sweep of the options what we would do in his place. Bear with me if I read you some extracts. I quote: ‘One important prelude to the recommendations: we believe that a small, strong general management body is necessary at the centre (and that is almost all that is necessary at the centre for the management of the NHS) to ensure that responsibility is pushed as far down the line as possible, i.e. to the point where action can be taken effectively. At present devolution of responsibility is far too slow because the necessary direction and dynamic to achieve this is currently lacking. Recommendations for action:
The Secretary of State should set up within DHSS and the existing statutory framework, a Health Services Supervisory Board and a full-time NHS Management Board. Units of management. District Chairmen should: 1. plan for all day-to-day decisions to be taken in
the main hospitals and other Units of Management. If decisions are to be taken elsewhere
than in the Unit, Chairmen should require justification. 2. Involve the clinicians more closely in the management process, consistent with clinical freedom for clinical practice. Clinicians must participate fulIy in decisions about priorities in the use of resources. Property. The Chairman of the NHS Management Board should ensure that a property function is developed so as to give a major commercial reorientation to the handling of the NHS estate. Patients and the community. The Management Board and Chairmen should ensure that it is central to the approach of management in planning and delivering services for the population as a whoIe, to: 1. ascertain how well the service is being delivered
at local level by obtaining the experience and perceptions of patients and the community: these can be derived from CHCs and by other methods, including market research and from the experience of general practice and the community health services. 2. Promote realistic public and professional perceptions of what the NHS can and should provide as the best possible service within the resources available. General observations. The clear similarities between NHS management and business management are much more important. In many organisations in the private sector, profit does not immediately impinge on large numbers of managers below Board level. They are concerned with levels of service, quality of product, meeting budgets, cost improvement, productivity, motivating and rewarding staff, research and development, and the long term viability of the undertaking. All things that Parliament is urging on the NHS. The NHS does not have the profit motive, but it is, of course, enormously concerned with control of expenditure. Surprisingly, however, it still lacks any real continuous evaluation of its performance against criteria such as those set out above. Rarely are precise management obectives set; there is little measurement of health output; clinical evaluation of particular practices is by no means common and economic evaluation of those practices extremely rare. Nor can the NHS display a ready assessment of the
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effectiveness with which it is meeting the needs and expectations of the people it serves. A general management process would be enormously important in: 1. providing the necessary leadership to capitalise on the existing high levels of dedication and expertise among NHS staff of all disciplines, and to stimulate initiative, urgency and vitality. 2. Securing proper motivation of staff. Those charged with the general management responsibility would regard it as vital to review incentives, rewards and sanctions.
Background to recommendations. It is not for the centre to engage in the day-to-day management of the NHS. It must make sure that the statutorily appointed Authorities do so effectively in accordance with the requirements of Government and Parliament. Sufficient management impression must be created at all levels that the centre is passionately concerned with the quality of care and delivery of services at local level. As a coherent management process is developed, of planning, implementation and control, the DHSS should rigorously prune many of its existing activities.
7 . On a general management role the essence of which is to improve accountability to seek major change and to secure motivation of staff. 8. Need for the estate function to act in a more businesslike fashion. 9. Need for a strong personnel function.
The report has to be set against some personal beliefs about running large organisations. 1. I believe in personal accountability for perfor-
2.
3.
4.
Other aspects of management. To effect change some outside catalysts will be required; but there are enough people at all levels within the NHS enthusiastically committed to wanting change and capable of making a contribution to ensure that it can largely be effected from within.’
May I just briefly emphasise some of those recommendations. Note the emphasis is on: 1. a satisfactory role at the centre with a split
2. 3.
4. 5.
6.
between policy making and implementation and the DHSS being reoriented to include in its broader activities support for the Supervisory Board and the Management Board. Delegation with hospitals free to take as many decisions as possible. Involvement of professionals in the management process. On a consideration as to what service the NHS should provide. Determination of objectives; measurement of output; clinical and economic evaluation of work. Concern for the best deal for patients, staff and the taxpayer.
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mance against clear objectives, reasonably precise resources and clear time scales for performance. All three have to be present for an effective management process. Every organisation is unique and any recommendations have to be considered sensitively in the light of its history, values and strengths. There is no point in denigrating what has gone before in order to force a comparison with the advantages of new proposals. All top-class organisations are marked by good strategic thinking at one extreme and powerful implementation at the other. Too many organisations wander the middle ground. One can put across an organisation whether in the public or private sector a series of templates to assess the effectiveness of the organisation. First all organisations should be involved with three things, quality of service, productive use of resources and motivation of staff to achieve both quality and productivity. Another template is how well does the organisation look after its patients (or customers in the private sector), how well does it look after staff, how well does it serve the community and how well does it serve the taxpayer or shareholder. Does all this seem hopeless generalisation-a detailed analysis could be the subject of another lecture, but certainly in 1983 quality, productivity, motivation and how well in detail do we look after and respond to the various audiences, rarely appeared in specific analysis on central or health authority agendas. I believe in delegation. My management philosophy tells me that delegation is good for two reasons. It is very liberating for people at local level running a hospital to feel that they have most of the powers necessary to give an effective performance. Secondly, from a top management point of view it enables you to stop up the excuses i.e. it stops managers at
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lower levels from saying that if only they had been allowed to take a particular course of action then everything would have been fine. Delegation is not a generalised term-it means that every major decision area has to be analysed carefully and clear authority given at every level of the organisation. There is no greater frustration for a manager than to be given new responsibilities without those responsibilities being very clearly specified. 6. Leadership is vital. It needs vision to show the path ahead, it needs the ability to motivate people. In an organisation consisting of enormously able professionals autocratic management is clearly impossible. Rather the view of a Chinese Philosopher, ‘To lead the people you must walk behind them’ i.e. by cajoling them, by persuading them, by gently motivating them in the right direction. It is not characterised by the management school of Abraham in the Bible who packed up his tents knowing not whither he went. It is more of the School of Columbus, who must incidentally, have been the patron saint of general management. Remember it was Columbus who as an act of faith and under instruction from the government of the day, set out believing that a new world was there to be discovered. His journey was characterised by great hardships and from the outset there was a severe shortage of funds. Ladies and gentlemen, I will not press the analogy too closely, other than to note he was successful. 7. I believe in competition. Competition is a great spur, but it needs good management to handle it. 8. Finally, I believe that change has to be handled well-top-class communication, persuasion that the vision carries credibility and that the planning is likely to be effective, all the time looking after the interests of staff and ensuring that they are trained to do the new work. And most importantly, listening to staff to ensure that their contributions are taken into account and their concerns noted.
which could encourage the staff to deliver. Observing the then Secretary of State I was reminded of what President Truman said when Eisenhower was elected President. ‘Poor, old Ike he has just come from the military and he will sit at this large desk pressing buttons, sending out instructions and making demands of everyone in the country, and not a damn thing will happen’. This is why I concentrated in the Management Inquiry Report in providing the necessary machinery to translate policy into effective action. That is why I made the recommendations for a top Supervisory or Policy Board involving outside directors in helping to bring realism and priority into policy formulation and a Management Board to introduce its own time scales and dynamic into implementation. This was to be replicated down the line by the general management process at regional district and unit level with responsibilities and accountabilities being spelled out as clearly as possible. The overall background to the report which I was seeking to reflect, was characterised by three major trends coming together. First that the NHS, born in the post war years of queuing and shortage, had to be updated to reflect the aspirations of people today. They don’t want a Health Service carrying the utility labels of the Forties and heavily rationed. They are looking for a Health Service with a good high quality label not only free at the point of delivery, but the point of delivery itself has to be more immediate and more sensitive to a patient’s needs. The second trend was that the public sector had been feeling its way from administration to management. The essential difference is that administration is essentially interested in the implementation of central and local policies to see that rules are enforced in as evenhanded a way as possible; management is a constant search for improvement, sensitive to all the audiences it serves, particularly to the users and to that end seeking to involve them and to respond flexibly to them. The third major trend was that in the development of large organisations there had been a definite move from a highly functional form of organisation, where work is How did all this work out? I was struck during my precisely organised according to skills or profeswork in 1983 on the division between policy sions, to a form of organisation structure where making on the one hand, and reality on the the work to be done is grouped not according ground in the hospitals in two respects. First, that wholly to the skills, but in terms of the end results the policy making seemed to take no account of to be achieved. Different kinds of work are the ability of the service to deliver, and secondly obviously done by different people at different that there was in fact no management process times, but the accountability is for the completed
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end product. So, the idea of general management was to reflect this. I realised that at local level this might involve impact on the traditional forms of organisation and would alter in many cases the reporting relationships. I also believed very strongly that knocking down the walls with which a profession surrounds itself can be a liberating or threatening experience, according to how you view it. I personally believed and intended it to be liberating in the sense that the doctors and nurses would have the opportunity of having a much greater say in the running of the Health Service and not be concerned solely with their professional work and responsibilities. It would also give them greater opportunities on a personal basis to take the top management positions at all levels within the Health Service-on that basis they could become the best of all managers, T shaped managers with an indepth professionalism accompanied by the broadening of management experience. The Management Inquiry Report was well received by government, but less well received by the professions. I am given to understatement. The nurses saw it as a challenge to a carefully established professional career structure. The medical profession saw the report correctly as questioning whether their clinical autonomy extended to immunity from being questioned as to how resources were being used. All the professions saw the report as the introduction of economics into the care of patients, believing that this was inimical to good care. There was a deepseated feeling that what distinguished the Health Service from the private sector or business or commerce was the very immunity of the Health Service from the supposedly corrupting influence of profit making and that this very immunity itself guaranteed high quality. This denies the fact that the hallmark of the truly great organisations in the private sector is that they have placed quality and customer satisfaction first and profit for a long time simply emerged as a by-product of effective service. The truth is that it is the same attitude which gives top class quality and top class value-an obsessive wish to do things better. The report was never intended to be confrontational with the professions. With two children as doctors I could very easily achieve confrontation with the professions domestically without having to take on the professions at large. What the report did achieve was something more subtle. It forced the professions themselves to rethink their
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position. I pay tribute to them to the extent that they have done this and certainly the response two years ago of the Royal Colleges to the latest government legislation was, even though in disagreement, considered and managerial to an extent which many would not have believed a few years before. One or two things I did not intend. Whilst my name at the time was primarily connected with general management I personally took this as shorthand for the introduction of an effective management process. I did not intend that the result should be yet another profession in the National Health Service to work in parallel with other professions. I know that parallel lines meet in infinity, but I was looking for something more immediate and temporal. I was, in short, seeking to establish a management process which would suffuse the whole activity and involve all in the Health Service in its effective implementation. Secondly, it is clear from the report that I did not believe in bringing large numbers of people in from outside. I simply did not wish it to be taken for granted that one could effect the change without some catalysts from outside with a different background and experience, but certainly not in numbers which the Health Service would be unable to absorb. The Report was implemented. Many felt that the implementation left much to be desired, particularly the nurses who felt that implementation at local level was particularly insensitive to their professionalism with nursing positions in many cases being absorbed or collated with other responsibilities. I personally would have liked different priorities of implementation. In any organisation one has to be sure that at the centre the organisation and responsibilities are clear and effective and similarly at the other extreme where service is to be delivered. The Supervisory Board and the Management Board were absolutely correct in concept but half-hearted in their implementation. Major policy issues were left uncovered. There was no attempt to establish objectives at the centre and no concentration on outcomes. In the hospitals there were experiments with budgeting and resource management. The first priority I always saw, however, was to establish responsibility clearly at local level with a management structure capable of delivering the tasks of the hospital e.g. through clinical directorates and an effective Management Board at local level. Systems information and financial management would follow and support the responsibilities but would be
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clearly secondary to that process. To seek to establish such information systems without clarity of the organisational structure is a bad case of putting the cart before the horse. A preliminary to all the above I saw as the need to motivate staff-by emphasis on quality, by reassurances as to their personal position and opportunities under the new system and above all, by explaining very fully what was being proposed-all this would ensure a joint effort towards a quality service. There is no doubt that the new management processes caused staff within the Service to think differently and to look at problems and opportunities in a new way. Certainly to introduce the type of management change that had been put forward was and is a long process. This leads to difficulty in that managerial time-scales and emphases are often different than political time scales and emphases, which tended to be governed by the next election. Add to this that politicians are not very excited by the management process.As with top civil servants the adrenalin flows in bringing out new policy documents, getting them through No. 10 and through the Houses of Parliament, whereas the process of implementation is very long and laborious. I remember one Minister in the mid-Eighties saying rather wistfully that getting the NHS to change direction was rather like turning an aircraft carrier, a long and slow process and even then what he overlooked was that an aircraft carrier, unlike the NHS at the time, had the advantage of a fairly sophisticated set of controls. I will qualify this comment on timescales later. So by the end of 1987, three years after implementation of the report, we saw General Managers in position accountable for the performance of their organisation; management systems were introduced with performance standards and performance reviews. There was a high emphasis on improvement in service. Authorities had in many cases reorganised to make their services more responsive and to take responsibility for quality assurance. There were significant trials of management budgeting or resource management giving doctors and nurses a bigger role in the management of resources through budgeting responsibility against agreed workloads, and some improvement in information systems. Just as general management was finding its effective feet the level of decibels both in the Health Service and on the political front, scaled new heights and Margaret Thatcher in early 1988 decided to estab-
lish her own Review and in the result to present new challenges for the recently established general management. It was an astonishing episode in many ways. It derived, as is well known, from the arguments as to levels of funding, with one or two high profile incidents in hospitals where patients were allegedly denied care because of lack of funds. It started out by seeking to examine new methods of funding the NHS and after careful consideration moved abruptly from this theme. It then switched to building on the existing management reforms and seeking to inject more competition and choice into the service. It chose to do this by means which would have made strenuous demands on a well established management, let alone the still fledgling management process. They were heady days. I remember Civil Servants talking about Perestroika for the Health Service and I remember commenting that in talking of Perestroika the analogy might be worse than the problem. Two years later, seeing what is happening to Perestroika, I think that was appropriate. The fundamental changes of the reforms were first to emphasise the different role for District Health Authorities, that they should be primarily concerned with establishing what health care provision was needed in their yarticular district and that they should purchase this from a variety of providers, either the new NHS Trust Hospitals, their own directly managed hospitals, or indeed from hospitals within the Health Service or in the private sector. This was abbreviated to the purchaser/provider relationship. Now for anyone in the private sector such a role for top management is a statement of the obvious. A director of distribution, for example, in a big retail company is not simply concerned with running the companies .warehouses and its transport fleets. He is concerned with ensuring that goods arrive at a store as ordered at the right time and in good condition. How he does that, whether through his own warehouses and transport, or direct from the supplier, or through using outside contractors is for him to decide, according to the quality and effectiveness of the service which is being offered. Nor of course was it new in the public sector. In my report on Community Care published more than a year before the Health Service Review, I said that the role of the local authority was not primarily to provide care directly, but to ensure that care was provided and to choose whichever means in the public, private or voluntary sector
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could best supply such care. Similarly, any top management in the private sector would understand the establishment of NHS Trusts-separate entities all within the umbrella of the parent company-as an alternative to but with similar aims to straightforward delegation of responsibility in as broad terms as possible. So the Trusts are all within the umbrella of the NHS and are tied into the delivery of the major objectives of the Service, not through a management line but by contract. The third change was to firm up the role of the management executive and the policy board very much on the lines of the previous management board and the supervisory board, but with in this case a firm instruction to the Ministers at the centre to make it work. Fourthly, the health authorities were reformed on more businesslike lines with people appointed who could best run the hospitals as distinct from being representative of particular groupings including local authorities. Fifthly, GP budgets were introduced and owing much, as did the concept of the internal market, to American influence or at least to the views as distinct from the recommendations of Professor Enthoven. The advantages of the review were, first, that it illustrated that the increasingly strident articles by commentators looking for some fundamental move away from the basics of the National Health Service-care, free at the point of delivery and financed out of general taxation-had been considered and rejected. Secondly, the fact that it was Mrs. Thatcher’s review added determination to ensure that its recommendations were pushed through giving new impetus to the managerial changes of recent years, and in particular that the position at the centre was clarified and made workable. This has been achieved and I am now confident that the Policy Board and the Management Executive are very capable of running the Health Service effectively. On the other hand, because it was Mrs. Thatcher’s review even the simplest management concepts were imbued, indeed saturated, with political overtones. The truth is that it is not a particularly political document. Any speculation that it was a prelude to privatisation of the NHS in whole or part or that the Trust hospitals were outside the NHS is pure fiction and could more realistically have been entered for the Booker Prize, except that the exchanges on the subject have lacked the necessary literary merit. The substantive aspects of the NHS remain undisturbed. The internal
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market is not competition red in tooth and claw. The possibility of real competition between purchasers or providers will in many cases not be practical, particularly in areas outside the major cities. It hopefully will not even be a managed market to the extent that this might imply excessive intervention from the centre. The reality is that it is a managerial market as distinct from a managed market with managers free to place funds where service can be most effectively and economically supplied. Thirdly the review has, in its emphasis on hospitals being given much more freedom and on GPs being given their own budgets, already caused a surge of new thinking and experiment, and very considerable enthusiasm to looking for new ways in which a quality service can be provided. What are the problems for the new management of the whole approach? 1. In a true market where there is real competition between the providers, the price would be determined by the competitive process. In fact in the NHS it will not be possible to rely in most cases on actual competition or on an evenly matched purchaser and provider to determine a price. This means that other purchasers and providers will have to rely on prices derived from a study or analysis at the centre of a broad range of contracts and costings. The problem is that the costings system to support this approach are as yet rudimentary and even then very much within the control of the providers. In many cases the apportionment of costs will be crude and can in certain cases be very crude. There is a lot of work to be done. I have illustrated that in the case of costs. It equally applies in the whole of the information systems necessary to support the new activities. 2. Problems which have arisen in communication as to the government’s intentions. The government had turned its back on the fundamental change to the methods of funding and at the same time emphasised that the NHS was not a commercial organisation (a fact I had recognised since 1948), but then paradoxically plunged into an emphasis on concepts of the internal market and the purchaserlprovider relationship which have a strong commercial ring. They were intended to shake up the NHS to new ideas of competition and choice and to make it clear to hospitals that they had to
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compete and be efficient in order to survive. To that extent such words are justifiable but buzz words for one audience can be gobbledygook for another audience. We have to explain in different simpler terms the intent of the reforms for the man in the street and for the general body of staff. Such words as the internal market and the purchaserlprovider relationship are difficult concepts in the Health Service itself, let alone to the public outside. Emphasis on these buzz words always reminded me of the story of Sergeant Sullivan, who was a King’s Counsel. He was defending some Irish tenants against eviction by the landlords. When the judge leaned over and said, ‘Surely your clients understand the maxim “volenti non fit injuria?” ’ Sergeant Sullivan replied, ‘My Lord in the taverns of Tipperary they talk of little else.’ So in Coronation Street and Albert Square one can imagine that they talk of little else except the internal market or the purchaserlprovider relationship. What they are actually interested in is how all the reforms will contribute to a better Health Service.
comes as distinct from simply talking about the input of resources. Depending on the type of contract which is agreed, whether it is a block contract, a contract for price and volume, or a contract for payment for units of treatment, there will be an increasing need for accurate information not only on costs, but more immediately on the quality of service being provided in all its aspects. Measurement of quality is an extremely difficult task, but it has to be attempted and built very specifically into the contracts. This is a major change in itself, but is, as I mentioned earlier, what the service is about-the delivery of a quality service at a reasonable cost-the two go together in the concept of good value. The Service has to get accustomed to receiving and using regular information on performance. The hospital and District Health Authority can build up their own information requirements and decide the frequency, daily, weekly, monthly, etc. It has to be good, timely and the minimum necessary for monitoring performance. General Managers will also need to enhance their communications skills in informing and consulting staff on major proposals affecting the hospital. They badly need to understand the importance of welding the hospital I now turn to the second part of the remit which teams together and this needs very great concern The Audit Commission gave me, ‘What kind of for the worries of staff in the period of major management skills will be needed in the new change and reassurance as to security and career environment?’ The first observation is that there prospects. In the hospitals themselves manageis no point in talking about skills unless respon- ment has to understand that they too have a sibilities are clearly understood. Whilst the new major, albeit different, healing responsibility. Trusts and GP budget holders may have been There is no point in confrontation with the very centre stage, it is the District Health Authorities professions through whom the changes have to be to whom we should look to ensure that the real achieved. A lot of this is good personnel work. In progress arising from the reforms is achieved on the Service generally, but in the major Trust behalf of the people within their district. General hospitals in particular, management will have to Managers of the districts have to include in con- learn new personnel skills. With the extensive tracts quite specific agreements on quality, waiting delegation of responsibility for pay and terms and times, appointments, speed of response, provision conditions then the ability to understand pay of information, as well as price. In the transi- systems and industrial and staff relations takes on tional phase GP budget holders may be quicker a new significance. Nothing will be more costly or off the mark in negotiating favourable terms for give rise to greater feelings of injustice if these their patients, but it is ridiculous that the DHAs questions are handled badly. The skills necessary should not soon be ensuring that the patients for are not to be under-estimated. The implicit whom they contract should be getting service at assumption has already been made that the advanleast as good as the GP budget holders. So the tages of handling pay hospital by hospital District General Managers have to be aggressive outweigh the disadvantages of the feelings of ineand vigilant to ensure that their patients are quity which may arise from pay being different in getting a quality service. different hospitals in close proximity to each The next observation is that the essence of the other. Considerable skill will be needed to handle new District Health Authority role and of the change in relative pay between individuals or hospitals is to concentrate much more on out- groups within the Trust hospitals themselves
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arising from management’s greater freedom to handle pay. Equal skill will be required to handle pay differentials between management in the Trust hospitals on the one hand and management in Districts and other authorities on the other hand, with the latter less free to pay the higher salaries. The third observation is to broaden the question. Management is not simply a bundle of skills, it is above all an emphasis on values, attitudes and beliefs, evidencing not only in communication, but in all aspects of behaviour that these are important. The manager or the chairman can talk until he is blue in the face about service to the patient, about quality etc. but if he once passes a hospital outpatient department which has long queues and an air of neglect; if he passes this without questioning as to why it is happening and seeking an understanding of what is being done to correct it, then he will show that he is not really interested in a quality service. Equally staff have to understand that an emphasis on quality is completely consistent with being cost effective. It has been a characteristic of the service that when you mention efficiency or costs there is the immediate reaction that they are inimical to a concept of quality. But I re-emphasise it should be the same attitude of seeking improvement which pervades both. We also need to get across to staff that at the same time we understand their concerns and are tackling the problems-genuinely tackling the problems. The reforms are important but not obsessively so. A major part of the motivation of staff within the hospitals and indeed of satisfying the public is a perception that the hospitals are being run well at local level and that the simple and obvious problems are being tackled. Where local management can evidence that it is running a quality operation and doing simple things well then staff morale is much higher. This has to be the case right through the service-at top level there are still too many reports on the public sector from the National Audit Office and from the Audit Commission which are highlighting glaringly obvious needs for management actionpurchasing, manpower control, estate management etc. (all mentioned as requiring action in my 1983 report and only recently receiving the appropriate attention). I mention manpower controls; in seeking to motivate professionals to face up to the many challenges, it is difficult to do this if at the same time they feel that a whole new bureaucracy of staff is being built up, whether in finance,
systems or whatever. I am the first to say that to carry out the reforms such staff are necessary. But it is unforgiveable to build up such staff without evincing at the same time that there is a proper system of manpower control in all areas, and that every job is scrutinised for its contribution to the overall aims. Let me address one more subject. We are now in the process of setting clear priorities, targets and goals for the NHS in the Green Paper ‘The Health of the Nation’. I am delighted we have come to this. I have always argued that it was completely inappropriate that we should from the centre be talking the language of priorities to the managers in the Health Service, asking regions and districts to come up with their priorities for approval, unless we were prepared to establish targets and priorities for the total Health Service. I raised this fairly regularly some years ago, but there was always a worry politically, in that to set targets which could be monitored might be giving hostages to fortune, a feeling, as someone once said, that the air might eventually become dark with chickens coming home to roost; a background feeling that Ministers did not like priorities because everything which is not a priority has six questioning back benchers attached to it. Also a doubt lingering from long government experience as to whether there was in fact the machinery to attain such targets. One of the great achievements of general management in the health service is that sensible and realistic policy stands a good chance of being implemented. The management process has taken root, none of the subsequent reforms would have been possible without it and life will never be the same again. So it is a brave but correct step which William Waldegrave has taken in submitting the whole of the NHS to the simple question as to what are our priorities for health over the next ten years. The ability to achieve this measured against targets at appropriate intermediate points, together with increased activity and greatly reduced waiting lists will be the sign that we are really going places as distinct from continually redesigning the sails or reinventing the compass. This latter step together with the reforms themselves, show that this government has been brave enough to have a timescale for the NHS much beyond the next election. The reality is that the reforms are unlikely to bring significant advantage before then. The government has realised that bringing about major change is not ,
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the 60 metres dash but a major steeple chase with all kinds of barriers before reasonable success. Management in the Health Service is enormously difficult and no business in the private sector would relish seeking major change if every incident was the stuff of headlines. The attempt in recent years to introduce and develop the management process in the Health Service was bound to be a rough ride and particularly to implement the latest reforms. The status quo has been challenged and once you change relationships between groups of staff, between different authorities and between various activities, you are almost bound to cause turbulence. Secondly, if you delegate and free people to take their own decisions, they will in three cases out of five not do things exactly as you would have wished. The consequent uproar is part of the price you pay for reaping the advantage of liberating management to take decisions and to do their own thing. The book ‘In Search of Excellence’, which is much quoted, did a signal disservice in this respect. It allowed any Chairman in the private sector to suggest that his successes were achieved in a quite orderly fashion by superb strategy, excellent planning, dynamic implementation and careful monitoring. My experience is that even in the best managed companies major change is a lengthy and not too orderly process-did someone say ‘steady state’ and ‘no surprises’? Hopelessly wishful thinking. I reiterate that this type of change is a lengthy process. You can get staff to understand the problems intellectually comparatively quickly, or at least one ought to be able to do so. To get people to identify with the reforms and to alter their behaviour accordingly is a much lengthier process and requires enormous effort, not least of training. Whilst I emphasise the length of the process, I am not subscribing to the Chairman Mao reaction when asked what he thought the impact of the French Revolution had
been-he said, ‘Give it time.’ At the other extreme, I do not expect miracles within six days. I can appreciate that the first example of major change was when the Almighty brought order from chaos within that period. He certainly would not have achieved it in even six years, let alone six days, had the House of Commons been sitting at the time contesting every painful inch. Am I confident? Am I optimistic? Of course. It has been an enormous privilege for me to have written two major reports, the Management Inquiry Report on the NHS and the Community Care Report. Both have the same thrust to ensure that we have the necessary machinery to translate policy into action. Both the Health Service and Community Care are major causes with which to identify-nothing can be more worthwhile. I have spent my life in the private sector seeking to give value and to create wealth. The mark of a civilised society is how well we use the wealth so created-to support the weak and comfort the afflicted. I travel fairly extensively, not least in recent years at the invitation of other governments to discuss Health matters. They have the same problems and in many cases are looking to the same answers as my report and the government reforms. The discussions have confirmed for me a view I have held for the last 43 years, that the NHS is the greatest piece of social legislation this century in this or any other country, translating into practical reality for me and for my generation the concept of care for one’s neighbour. All we have been seeking over recent years is, true to those basic ideals of the NHS, to manage the Service so that it meets the advances in medicine and the changing expectations of the people it serves. I believe that in any history of the Health Service the 1983 report and the process of general management will be seen to have been a major contributor.
